The level of home builder confidence in the single-family home sector of the housing industry has shown an increase of four points, reaching a level of 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This was the highest reading since May.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” says NAHB Chairman Granger MacDonald. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

“It’s encouraging to see home builder confidence return to the high 60s levels we saw in the spring and summer,” adds NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market to continue to strengthen at a modest rate in the months ahead.”

Resulting from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index measures home builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each part are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted increases for October. The component measuring current sales conditions increased by five points to 75 and the index gauging sales expectations in the next six months increased five points to 78. The section measuring buyer traffic ticked up a single point to 48.

According to new research published in the Green Multifamily and Single Family Homes 2017 SmartMarket Brief, a free report from the National Association of Home Builders (NAHB) conducted by Dodge Data & Analytics, green construction is quickly becoming more popular among both single-family and multifamily home builders.

At least one third of single-family and multifamily builders who participated in the survey said that green building represents a substantial portion of their overall activity – over 60 percent of their entire portfolio– and by 2022, this number is expected to increase to close to half in both the single-family and multifamily sectors.

Within the one third who said green building represents a large portion of their overall activity, almost 30 percent of multifamily builders fall into the category of “dedicated” green builders (more than 90 percent of their portfolio). On the single-family side, the percentage of “dedicated” green builders is close to 20 percent, but that share is expected to increase substantially by 2022.

“These findings show that green building has become an established part of the residential construction landscape,” says NAHB Chairman Granger MacDonald. “It is no longer a niche business; our members recognize the value of building green and are incorporating these elements into their standard business practices,” MacDonald adds.

Increasing energy efficiency continues to be the most common method of improving the performance of a green home, followed by working to create a healthy indoor living environment.

The report also showed that a significant number of builders are developing net zero homes or plan to build net zero homes in the near future. With a net zero home, the energy used by the building equals the amount of renewable energy created onsite.

Among those surveyed, 29 percent of single-family home builders have built a net zero home in the past two years, and 44 percent expect to do so in the next two years. Builders agree that an increased customer demand and a competitive advantage are the top two drivers motivating them to develop net zero homes.

Another reason for the rise in net zero homes is the increasing use of renewable technologies, especially solar photovoltaic panels. In two years, the percentage of builders who used these panels increased from 19 to 23 percent. Close to half (43 percent) of the builders surveyed expect to use this technology in the future.

Other SmartMarket findings suggest the single family green home market is evolving. The report findings demonstrate that homebuilders are less concerned about higher start-up costs than in previous studies. There was also a decrease among people who believe consumers will not pay additional costs for green building.

Finally, between one half and two thirds of the survey respondents say seven different drivers are motivating them to build green, instead of one or two drivers as in the past. In fact, these top drivers, selected by between 64 and 57 percent of single family builders, include customer demand; greater availability and affordability of green products; the prospect of producing a higher quality home; appraisers recognizing greater value in green homes; government or utility incentives; and changes in codes, ordinances and regulations.